How do I procure cloud-based software in government?

What is government software procurement and how does it work? 

Government software procurement refers to the process by which agencies acquire software solutions or services to meet their specific needs.

In most agencies, government procurement is managed by a dedicated team of contract specialists. The contract specialists are responsible for ensuring that the agency procures government technology in a manner that is legally sound, does not show preferential treatment to any one vendor, and is a responsible fiscal choice for the agency. 

While the government contract specialists are not responsible for vetting the business use case for the agency, they are responsible for making sure all agency purchases are compliant with state procurement guidelines. 

Contract specialists may be under the agency’s Finance & Budget division or, occasionally, under the agency’s Information Technology division. 

Most common procurement paths for government cloud solutions

There are several options for procuring government cloud solutions. These are the most common procurement routes we see agencies choose: 

1. Leverage an existing contract vehicle through a certified reseller

This is the most traveled path to procurement in government agencies. Many governments already hold contracts with large, established vendors that have been pre-vetted for security and compliance. Software providers work with these vendors to “resell” their software to government agencies via the contract vehicle. 

Software vendor → Large vendor with existing contract vehicle resellers the software  → Government agency receives software 

This is a preferred procurement option for government cloud solutions because it avoids a time-intensive request for procurement, and ensures that state agencies are still complying with necessary procurement guidelines. The one caution with existing contract vehicles is that the resellers will mark up the cost of software between 5-10%, meaning government agencies may not always get the best deal on the cost of the software. 

2. Request for Procurement (RFP)

The Request for Procurement is undoubtedly the most labor and time consuming government procurement option. In this path, the government puts out a “Request for Procurement” document, detailing their ideal government software solution and asking vendors to respond with a “bid.” 

The RFP usually is posted anywhere from 30-90 days, in which time vendors can respond with their bid. Vendor bids include detailed statements of work, cost proposals, timelines, customer case studies, and other supporting information that shows how why they are most qualified to win the contract. 

After the bid period closes, contract specialists review and grade vendor bids based on evaluation criteria (cost, proposal, vendor history). Then, the vendor with the best bid is awarded the contract. 

While the RFP is on paper the most equitable public procurement path, there are many potential risks associated with it. First, RFPs tend to favor large, incumbent vendors that have dedicated procurement teams who can spend the resources to apply for RFPs. Smaller, leaner software vendors may not have the resources to do this and thus are left out.

Second, RFPs are a very time consuming and lengthy process. If your agency has a real issue that needs to be solved quickly, RPFs will not get you the solution in a timely manner. Consider timeline when choosing which government procurement path to go down. 

3. Sole source contracts

Sole source contracts are awarded to vendors that have unique, proprietary government software and little to no market competition for the goods they provide. Sole source contracts require extensive market research and documentation to ensure vendors truly are the best and only providers of software in their category. 

While sole source contracts avoid a lengthy RFP process, they are exceedingly rare in governments. This is because sole source contracts often come under heightened scrutiny by government officials and watchdogs who want to make sure agencies aren’t extending preferential treatment to vendors. In order to receive a sole source contract, vendors must be prepared to provide proof of their proprietary software to government agencies. 

Trying to understand why agencies are moving away from on-prem solutions? Read our guide on the benefits of cloud-based SaaS in government. 

Frequent Asked Questions 

I’ve never procured government software at my agency and don’t know where to start. What should I do? 

Start by identifying who manages software procurement at your agency, usually a Contract Specialist in the administrative part of your organization. Set up a meeting with them to discuss procurement options and refer to this blog post along the way. 

I think my agency wants to take the RFP route. What do I need to get from government software vendors to support this process? 

If your agency chooses to go through with a Request for Procurement, make sure to get a sample Statement of Work from vendors to support shaping the content of the RFP. RFPs are time consuming, and a lot of that time is spent actually writing the 50-page Request for Procurement. 

There’s no need to recreate the wheel, you can piece together Statement of Works to get to a RFP that works best for your agency. 

We hope this procurement guide is helpful to you in your journey of procuring cloud-based software in government. To find out why Esper is trusted by government agencies across the nation to move their policy management to the cloud, request a demo with our team.